Implementation Guide

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7. Fixed income external systems

About electronic trading platforms

• Many fixed income security types can now be traded on electronic trading platforms, from the most liquid government securities through to less liquid credit products.
• Many of the largest dealers, buy side institutions, and retail broker dealers are actively trading on these platforms.
• Increasingly these platforms are using FIX to enhance the services that they provide to their dealer and institutional investor clients.

Going beyond trade execution

• A number of these platforms have evolved their services to include broader STP solutions for the bond markets. These services may include not only trades executed over the platforms but also trades done by phone.
• The FIX connectivity that the platforms offer can be leveraged across these services for the benefit of investors, dealers, and custodians.
• This connectivity enables investors and dealers to easily and cost-effectively automate each step of the investment cycle.

Using FIX with electronic trading platforms

• By embracing the FIX Protocol, these platforms have allowed a growing number of investors and dealers to link in-house OMS systems for the exchange of both pre-trade and post-trade messages.
• These links enable industry participants to eliminate the re-keying of data between systems, lowering error rates and increasing the efficiency of the process.
• FIX interfaces can provide well-defined and standardized access to inventory management, order routing, and trade confirmation services.
• The use of the FIX Protocol enables trading participants to leverage their existing technology investments and expertise.
• Some of the specific uses of FIX connectivity with the electronic trading platforms are detailed below.

• Real-Time Inventory Management

  IOI, NewOrder, and Quote messages can be used to update inventory for institutions using the electronic trading platforms.

• Order Routing

  Customers can send orders to the platforms using the FIX NewOrder message.

• Notices of Execution

  Customers can receive FIX ExecutionReport messages notifying them of trade executions which can update participant systems in real time.

• Allocations

  Investors can send allocation instructions to dealers using the FIX Allocation message. Investors can receive back FIX Allocation messages containing net money calculations.

• Confirmations

  Customers can receive FIX Confirmation messages as individual allocations are reviewed and confirmed by dealers.

Connecting to an electronic trading platform using FIX

• Request a copy of the FIX interface document from the platform.
• Identify, build, or procure a FIX engine to implement the Protocol and to serve as the bridge to your OMS application.
• Enhance your OMS application to exchange the component messages with the platform.
• Exchange network data with the platform in order to configure firewalls and session identities in both environments.
• Bring up the FIX session and start testing.
• Following successful testing, move your applications into production.

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